Using Chapter 13 and Chapter 7 Bankruptcy to Stop Foreclosure & Save Your Home
If you are behind on mortgage payments (or might be soon), and you want to save your home from foreclosure, we can help. Robert Russell has provided Bankruptcy (and foreclosure prevention) services for more than 25 years. Robert Russell has helped literally thousands of clients with financial challenges. Robert Russell has the knowledge, experience, and compassion to help you save your home.
How to Stop Foreclosure & Save Your Home Using Chapter 13
Chapter 13 bankruptcy is a great option to help save a home from foreclosure.
A Debtor in Chapter 13 has POWER provided by the Bankruptcy Code to (1) stop foreclosure immediately upon filing and (2) retain the home by proposing a reasonable way to get caught up on the arrears over time (which is typically up to 3 to 5 years).
A Debtor in Chapter 13 has POWER. A mortgage creditor cannot just say they don’t want to go along with Chapter 13 and would prefer to foreclose. Chapter 13 does not work that way.
In Chapter 13, Debtor just needs to come up with a reasonable plan to get caught up on the mortgage over a period up to 3 to 5 years – even if the mortgage company does not want to wait that long. Once a Debtor has a reasonable plan to get caught up, the mortgage creditor must accept the plan.
First, at Robert Russell Law Office we don’t require a lot of money up-front to file a Chapter 13. Sometimes, we just need the $310 filing fee. Each client’s circumstances are reviewed for a payment that makes sense under their particular circumstances. (We also offer a free initial consultation to discuss your options.)
Second, with more than 25 years’ experience, we know how to come up with a plan to help you save your home. That is where our experience matters.
Given our experience, we know that a reasonable plan to save a home from foreclosure can take many forms.
Chapter 13 can:
- Payments To Cure: Pay the Chapter 13 Trustee money each month to cure part of the arrears so that you are caught up by month 60 or sooner.
- Example: If the arrears are $18K, a debtor can pay $300 a month for 60 months (equal $18K), or $600 for 30 months (equals $18K) to get caught up on the arrears.
- Payments Increasing: If your finances are improving, you can start off by paying less to the Chapter 13 and increase the amount over time so that you are caught up on the mortgage by plan month 60.
- Mortgage Modification: While in Chapter 13, a Debtor can also seek and obtain a mortgage modification from the mortgage creditor EVEN IF a modification was denied prior to filing bankruptcy. Our clients get them on a regular basis.
- Payments + Refinance: If you cannot afford to get caught up by equal monthly payments, you have time to attempt to refinance the mortgage to get current.
- Payments + Sale: If you cannot afford to get caught up by equal monthly payments, you have time to sell the home so that you – and not your mortgage company – get to retain any non-exempt equity in the home.
- Be Creative: Each scenario is different with many possibilities. Any creative and reasonable plan to cure the arrears will work. Creative plans might include:
- A Loan from a family member or friend to help cure
- A 401K loan to help cure
- Increasing income by getting a renter to come up with funds to cure
- Sale of other assets to come up with the necessary funds to cure
- Try a mortgage modification and if that does not work, then you can try a refinance, and if that does not work then you can propose to sell the home (and keep your equity versus losing it to foreclosure)
- And so on.
Filing a Chapter 13 with the help of an experienced attorney can help you create a plan to save your home from foreclosure.
How to Stop Foreclosure & Save Your Home Using Chapter 7
A Debtor in Chapter 7 has POWER provided by the Bankruptcy Code to stop foreclosure immediately upon filing. Chapter 7 gives a Debtor about 3 months protection to come up with, if needed, a longer-term plan to prevent foreclosure. Chapter 7 is a powerful tool to prevent foreclosure and buy time, if needed, to come up with a long term plan.
Chapter 7 can:
- Free Up Money: Discharge credit cards, personal loans, medical bills, etc. to free up money to be able to pay the mortgage.
- Buy You Time + Pay: Give you three months or more to gather the necessary funds to bring the mortgage current.
- Buy You Time + 13: Give you three months or more protection to help you qualify for Chapter 13 and come up with a plan to cure the mortgage arrears over 3 through 5 years in Chapter 13.
- Yes, you can file a Chapter 7, get a discharge and then file a new Chapter 13 to save your home assuming you can then create a plan to cure the arrears in 3 to 5 years.
- Yes, you can convert your Chapter 7 to Chapter 13 if you qualify for a Chapter 13 while you are still in Chapter 7. For example: If you don’t have a job and file Chapter 7, but find a job after filing, you might be able to convert to Chapter 13 and come up with a plan to cure the arrears over 3 to 5 years.
- Buy You Time For Mortgage Modification: Give you time to obtain a mortgage modification.
- Buy You Time For Refinance: Give you time to obtain a mortgage refinance.
- Buy You Time To Sell: Give you time to voluntarily sell the home so that you get the equity out of your house and not your mortgage company.
- Save Equity By Chapter 7 Trustee Sale: Allow you to chose to have the Chapter 7 Trustee sell your home before foreclosure so that way you get some of the equity form the sale (versus just the mortgage company at foreclosure). [Note: In Washington, a Debtor in Chapter 7 & 13 bankruptcy can exempt and keep up to $125K in equity.]
Filing a Chapter 7 with the help of an experienced attorney can help buy you critical time to prevent foreclosure.
Robert Russell has provided foreclosure prevention services for more than 25 years. Please feel free to contact us for a free initial consultation to see how we can help you prevent foreclosure and save your home.